Cruz deregulation plan in NAFTA would circumvent Democrats

1of3Sen. Ted Cruz, R-Texas, speaks to members of the media near the Senate Chamber on Capitol Hill in Washington on Jan. 18, 2018. MUST CREDIT: Bloomberg photo by Zach Gibson.Photo: Zach Gibson / Bloomberg

2of3Kevin Brady (R-TX) presides over a markup session of the proposed GOP tax reform legislation in the Longworth House Office Building on Capitol Hill in Washington, DC.(Photo by Chip Somodevilla/Getty Images)Photo: Chip Somodevilla/Getty Images

WASHINGTON – With negotiations to modernize NAFTA coming to a head, Texas Republican Ted Cruz and some of his conservative Senate allies have been pushing the Trump administration to use the trade pact as a way of getting around Democratic objections to the GOP's broader deregulation agenda.

But despite a GOP consensus on reducing business regulation of all kinds, Cruz's gambit appears to be getting little buy-in from Republican leaders on trade – including some key Texas Republicans – who worry that it could blow up a final trade deal with Mexico and Canada.

At the core of the dispute is Cruz's proposal to link the ongoing NAFTA talks to a separate regulatory plan known as the REINS Act, which would require Congressional approval of any new regulation that would impose more than a $100 million cost to the economy.

Though popular among Republicans bent on reducing what they see as burdensome regulations on environmental, workplace, and consumer affairs, inserting the REINS Act in NAFTA could introduce a new level uncertainty in negotiations that some lawmakers already consider politically fraught.

Among the skeptics is Texas Republicans John Cornyn, the No. 2 GOP leader in the Senate, who on Thursday called it a "strange fit."

Another is U.S. Rep. Kevin Brady of The Woodlands, chairman of the House Ways and Means Committee and an influential GOP voice on trade. A spokeswoman for Brady told the Chronicle this week that Brady "has been a long supporter of the REINS Act and other legislation to reduce burdensome regulations, but is not convinced that tying this bill to an international trade agreement is the right vehicle for enactment."

The divide illustrates a familiar dynamic surrounding Cruz's tenure in the Senate, where he has long pressed for more aggressive tactics than GOP leaders would like in policy battles with Democrats – such as the 2013 government shutdown over the Affordable Care Act.

Trade, however, divides the Democrats as well. While anti-globalization elements in the party's labor wing have long expressed suspicion of multi-national trade pacts like NAFTA, the Democratic leadership has generally embraced the landmark Clinton-era agreement. Democrats of all stripes, however, generally have opposed GOP efforts to weaken government environmental and workplace protections, including pushing back against recent Trump administration initiatives on air and water quality.

Cruz, backed by a coalition of conservative groups such as the Club for Growth and Freedom Works, has pressed in a series of television appearances and behind the scenes to add a deregulation plank to NAFTA. In a recent letter to the White House, he argued for using the president's Trade Promotion Authority (TPA) powers to circumvent an expected Democratic filibuster on the REINS Act by making it part of a NAFTA deal, which would be subject to a straight up or down vote in the Senate.

"Most importantly, taking this approach means that you could ratify your improved version of NAFTA before November of this year," Cruz wrote in a letter to Trump last month. "And under the Trade Promotion Authority Act's expedited procedures, we can avoid a filibuster and pass implementing legislation in the Senate with only 50 votes.

"No alternative this year," Cruz continued, "has so much promise to lock into law most elements of your economic development plan and timely realization of the economic benefits it will bring."

Republicans currently have a 51-49 majority in the Senate, a narrow edge that they have to protect in the November midterm elections.

The REINS Act – an acronym for the Regulations from the Executive in Need of Scrutiny Act – was originally proposed as a Tea Party measure more than a decade ago. Several versions have been passed in the House, but it has never gotten through the Senate, where Democrats have enough members to block it in procedural moves requiring 60 votes.

Cruz's letter also was signed by Republicans Cory Gardner of Colorado and Steve Daines of Montana.

Although the Trump administration has prided itself on reducing regulation through administrative acts and orders, more thoroughgoing GOP reforms like the REINS Act need Congressional action.

In a Fox News interview Monday, Cruz said that if enacted, the REINS Act would be "the most significant, far-reaching structural reg reform ever passed."

NAFTA, the North American Free Trade Agreement, was negotiated under former President Bill Clinton to govern the $1 trillion in trade between the United States, Canada and Mexico.

Though largely favored in the business community and among bipartisan majorities in Congress, the trade pact has come under sharp attack from Trump, who has sought to renegotiate more favorable terms for American businesses and workers, while at the same time pushing for tariffs against other countries like China that have trade surpluses with the U.S.

Amid the uncertainty over the talks, writing the REINS Act into a new "competitiveness" chapter in NAFTA has made some lawmakers nervous, even if Cruz says the U.S. could impose the requirements unilaterally on itself – without affecting Mexico and Canada.

Texas, a leading exporting state, has a lot at stake in the talks, which are believed to be advancing into their final stages. For now, the REINS Act is not part of the discussion among congressional leaders tracking the closed-door negotiations.

"I am not intimately familiar with attempts to try to insert that in a NAFTA reorganization," Cornyn said. "It strikes me as a kind of strange fit."

Cornyn said he would like to see Congress approve both the REINS Act and new NAFTA deal, but not as one package. Even separately, neither is a sure thing.

"While I'm hearing more optimistic reports from the vice president (Mike Pence) and others about successfully negotiating a modernized NAFTA," Cornyn said, "I don't know whether we have the political support that we need in the Senate to pass whatever they decide upon, because there hasn't been, in my view, sufficient consultation with Congress."

Brady, for his part, said he does not believe the REINS Act is on the table.

"Our focus has been on a pro-growth, modern NAFTA, which I think is incredibly important to the economy," Brady said Wednesday when asked about the REINS Act. "So my understanding is the U.S. Trade Representative is sort of laser-focused with Mexico and Canada in this final two weeks of trying to arrive at an agreement for a modern NAFTA."

Kevin Diaz came to the Houston Chronicle in February 2014 with more than a decade of experience covering Washington. Before that, he was the chief Washington correspondent for the Minneapolis Star Tribune, where he got his start in journalism in 1984 as a night cops reporter. During his tenure in Minneapolis, he won awards for his coverage of gang crime and city hall. He also taught public affairs reporting at the University of Minnesota, where he received his Master’s. After a stint at the Washington (D.C.) City Paper, Kevin went back to the Star Tribune, where he won national awards for articles on globalization and immigration. He also covered the 9/11 terrorist attacks from Washington and New York. Born and raised in Italy, Kevin has reported from Italy, Brazil, Mexico, and Cuba, where he covered Jesse Ventura’s 2002 trade mission. In 2003, he filed daily Iraq War dispatches for McClatchy Newspapers from the U.S. Central Command in Qatar. In 2006, he covered the presidential election standoff in Mexico. He also has covered Washington for the Anchorage Daily News and the Idaho Statesman.